銀行通過股東理論決定的評估
 

由于過去二十年，信息技術離岸外包的增長趨勢從來沒有停止過。這種現象伴隨著全球化。數十億人參與全球化是一個自由市場的世界，行業和國家同意將其離岸外包是由威廉（威廉?弗蘭克，和摩西，2006）強調的。這種現象也發生在澳大利亞。澳大利亞銀行付出大量的努力來參加IT離岸外包活動。

不同經濟體之間的相互作用導致的IT離岸外包會對這兩個離岸外包的國家產生巨大的經濟效益。然而，每一個動作或事件都會引發雙向影響，并可能導致一個道德問題發生。這是由詹森（詹森，Kirkegaard＆勞格森，2006年）所說，由離岸外包帶來。負面效應困擾犧牲的一群人，如失業，過度教育問題，社會不平等現象可見一斑。 

離岸外包可以帶來什么好處和利潤，誰反對這個活動？
 

Evaluation Of Banks Decision Through Shareholder Theory Economics Essay

 

Since the last two decades, the increasing trend of IT off-shoring growth has never been stopped. This phenomenon is accompanied with globalization. On account of billions of people participated globalization which is a free market world, industries and countries agreed to IT off-shoring activities which is underlined by (William, Frank,& Moshe,2006). It also happens in Australia. Australian banks paid lots of efforts to participate IT off-shoring activities.

 

The interaction of different economies lead IT off-shoring generates huge economic benefits to both off-shoring country and the country of off-shoring contractor. However, each action or incident will evoke two-way effects, and that may lead an ethical issue occur. This is evidenced by (Jensen, Kirkegaard& Laugesen, 2006).The negative effects which are brought by off-shoring are troubling the sacrificed group of people, such as job losses, over-educated problem, inequality of community.

 

What benefits and profit can off-shoring bring and who will oppose this activity? Who should come up to solve this problem and establish a fair regulation system to provide the equality to all parties? Obviously the answer should be government. The IT off-shoring will continue to increase within the country. Hence government should take the responsibility with this circumstance. Otherwise, the negative effects will erode chronologically the benefits and finally the unpredictable outcome will occur.

 

Definition of off-shoring:

 

In regarding to the term "off-shoring", is a type of outsourcing. To simply explain off-shoring, it means industries within domestic country outsourced business functions to foreign country due to cost reduction reason or strategic reason to enter a new market. In virtue of the difference of labor costs between two different countries, industry which provide off-shoring functions is often from country that has higher labor cost such as USA, Australia, European countries, off-shoring provider comes from low labor cost country for instance India. Higher labor cost industry can save different sorts of cost such as wage expense. Banks or businesses can prefer intelligent and splendid staff from lower labor cost country.#p#分頁標題#e#

 

(Novella, Christoph& Malte, 2007) defines off-shoring as "the relocation of production processes abroad, is an age-old phenomenon". This activity helps reduce transportation and communication cost and at the same time makes relocation of traditional production stage more and more convenient. If an IT staff will cost 60 dollar to perform tricky service in Australia, in the country of contractor for example India only cost 6 dollar. As a result, off-shoring could not only provide developing country employment and make work more efficient, but it can also deliver cost reduction to developed country.

 

Evaluation of bank's decision through shareholder theory:

 

Bring this case to Friedman's theory; the unique corporate social responsibility of business is generating profits for the shareholders (within the constraint of law). From this theory it seems that there is nothing wrong with banks' decisions to off-shore IT jobs. Lots of Australian invested in superannuation which means that most of them directly or indirectly own bank shares. Banks bore the obligation to improve the performance and reduce expenses for the maximum return to their shareholders. Banks believe that off-shoring is a dispensable tool to tackle this obligation, and also reduce the impact of Global financial crisis to Australian banks.

 

The cost reduction is the main reason for bank to adopt off-shoring decisions. As (Alexandros, Karen&Gopala, 2010) itemize the reasons that adopt off-shoring into two categories which are “cost reduction” and “other reasons. Then they picked suitable samples and examined the differences between the two reasons. Finally they found the primary off-shoring purpose which is cost reduction can realize more abnormal return and much more prosperous long-run operating advantage. When Australian banks announced they would strengthen the off-shoring activities, which will bring massive benefits to the shareholders and stockholders.

 

In contrast, it is the practice that high-skilled staff gains high salary. If banks would like to off-shore staff to assist other countries, they usually choose high-skilled staff to accomplish the mission, or the reputation of that bank will be lowered due to bad performance and assistance, the other reason is obviously wage expense reduction. However, delivering high-trained staff overseas will have impact to the skill of domestic countries staff, which turns out the banks’ operating error and other incidental problems.

 

Since banks attempt to lay off large numbers of employee, it may temporarily give banks good return, but in the long run banks are forced to invest more capital in order to improve the skills of staff and attract new blood of employee. The jobs which are lost will be refilled in the long-term, but with the improved technology the jobs may not exist anymore. Banks will seek more highly trained and flexible workforce to amend the losses of jobs.#p#分頁標題#e#

 

Hence banks attempt to magnify the degree of off-shoring scale is not fully following the shareholder theory, but undoubtedly the gain from the activity does comply with shareholder theory, and should be justifiable .

 

Evaluation of bank's decision through multifiduciary stakeholder theory:

 

From the perspective of Freeman’s multifiduciary stakeholder model, it underlines manager is liable for all stakeholders’ benefits and bears fiduciary obligation to all stakeholders. Each decision should be made based on the interests of all stakeholders. In this case, the stocks are bank, employee, community, consumer, government, off-shoring company, stockholders, and contractor company. As mentioned before, banks, government, contractor company and stockholders can more or less obtain benefits from off-shoring.

 

Government can take part of benefits from off-shoring because of more efficient work can be done outside of and GDP growth will be shifted up. Evidences are provided by (Julian, 2005)

 

The most unfairly treated stakeholder is employee. The interests gained from the decision to spread off-shoring are built based on the sacrifice of employee. Despite the decreased salary when employees who are told to go overseas, they still lose explicit rights. Firstly, the high-trained staff is often over-educated when they go to a comparable poor country; their talents cannot be exerted in the reason of no high-tech stuff or special knowledge. There are not many prospects for the career development and skill improvement of employee which is indicated by (Patrick, 2007) Secondly, a new working environment will induce multifarious communication troubles and company culture, which is troublesome for employee who cannot comprehend the colleagues who are working in the other country. Moreover, the time difference between countries will lead contingency and inconvenience for liaisons process, the functions which are off-shored may not get connection with headquarter in time. Thirdly, (Martin, 2012) carries out that when off-shoring increase the unemployment rate of Australia, on account of banks or companies would like employ highly educated staff from developing country which are paid at lower rate of wage. As a result, domestic staff would lose their job positions, and then people who are still working will pay more taxes to compensate the replaced workers under Centrelink. This is absolutely unjustifiable and unreasonable; employee will purchase free lunch for the banks or other businesses which already adopted off-shoring. Banks can gain productivity in terms of other stakeholder’s blood.

 

Furthermore, local community may also suffer in this activity. (Martin 2012) demonstrates that the amounts of workers in Australian manufacturing factor is 1.4 million out of 13 million total population in 1974, but in 2012 it is only 900000 workers. This is a unavoidable issue for us to ponder over, since the wages of labors never go down, preferring foreign labors is the optimal option rather than give out extra money, the manufacturing to Australian GDP is massively declined.#p#分頁標題#e#

 

In consideration with consumers’ interests, this is an important moral issue. While the scale of off-shoring IT activities are magnified, consumers will experience less efficient banking operation process and more possibilities of operating errors thanks to lack of employee in domestic country. Time is money and customer is the lord. Banks seem to violate both of the potential rules. Thus from the disobedience of taking all obligations for stakeholders, banks are not ethically proper to signify the decision.

 

Reasons of Bank and other businesses will not self-regulate:

 

Before adopting the strategy of self-regulation, banks and other businesses will consider whether their competitors will do so. In addition to this case, banks will contemplate the price they will pay which is caused by the benefits that off-shoring can bring and the cost to stay far away from this activity. It seems that shift functions out to a lower-cost location over long period seems to be a new started trend within financial sector. Banks are likely linked with “prisoner dilemma”.

 

From the aspect of Bank's own interest, banks is satisfied with the proceeds which are procured from off-shoring. (Wirth&Gentle, 2003) shows by changing functions to cheaper locations can increase the ability of banks' organizational resilience, for example if any IT infrastructure problem or failure occurred in banks' Australian branches, bank own more outside ability from contractor's country to recover from this event. What is more, (Sundaramoorthy &Rieker, 2004)points out that different time zone may be not an disadvantage of off-shoring jobs. Banks can set two call centers in both off-shoring country and off-shored country, then they exploit this advantage to perform 24 hour call centre service for customers, even weekends. Therefore, as a competitor in banking sector, each bank will adore these positive effects and is unlikely to set limitations or restrictions in off-shoring, if it does so, which means the bank will discard the chance of receiving business continuity. Bank cannot neglect shareholders' benefits by choosing the moral strategy to do the self-regulation.

 

Since there is no sufficient regulation by regulator in banks' off-shoring activities, banks' incentive to self-regulation is eliminated. In the aspect of banks' own influence power within industry, one single bank cannot affect anything by only unilateral self-regulate. They are theoretically incompetent to achieve the regulation. Another important thing that drives the possibility of banks' self-regulation is that the immense industry pressure such as fear of the banking sector of equity market turn to be depressed if banks do not participate off-shoring but the other sector for example manufacturing sector does. Banks and Banking sector have to find different ways to raise profit margin. Another point of why off-shoring becomes so momentous in Banking industry, is the successful pioneers already profit a lot for example the substantial increase of HSBC Holdings PLC's share price after taking part in off-shoring. Off-shoring seems to become a token to prove bank is eminent and healthy. Those who do not join may be in danger, the action of self-regulation may deliver message to shareholders that banks are reluctant to cut down the cost and they will question banks' ability and sustainability. In addition that the losses of confidence will result in the sale of banks' equity, the stock price might fall in a long period. None of the banks could assure the other banks would fairly contribute self-regulation to return the welfare to the community. In the market, none of them want to be superseded by the others.#p#分頁標題#e#

 

To take a global view with this case, due to Australia has lower labor cost than US and Europe, the adoption of off-shoring in Australian banking industry is later than those countries. Banks outside Australia already acquire lots of benefits from exploitation of off-shoring, they may have rebutter and healthier banking system. With the effect of globalization, it is hardly for banks in Australia to deviate the dominant development of the future, or it will lead Australian banking sector become disjointed with the global banking. Then the incidence might be a drag on Australian banking growth and prospects.

 

Reasons of government will not introduce regulation:

 

As we identified why banks are unwilling to follow the self-regulation action, consumers are complaining why government do not carry out external regulation to protect their rights, employee are grumbling why government do not stop and confine the scope of off-shoring to alleviate domestic unemployment rate. Actually the government does have the intention to do so, but reality is that miscellaneous factors stops government's further action in regard to the regulation. Firstly, a bulk of countries have adopted IT off-shoring. And it seems that companies and banks will undertake off-shoring contracting through internet communication hence they can ignore the location difference. With the unstoppable growing of off-shoring, government is hardly to intervening and regulating the activities unless it strengthens auditing to banks' operation or overturn the traditional procedure of off-shoring to enforce a new means to continue the activity. Moreover, government would have to audit the transactions with the other party which is far away from the nation. Therefore if the audit occurs, government should get permission from the other country to tracking the transaction . The increased time spent and Auditing fees will engender both trouble to government and banks. Costs may exceed the gain to force a law.

 

From another aspect, off-shoring can generate job opportunity for the developing countries. Thus residences in developing countries can go out of poverty, and it can provide them a bright prospect. It also expresses a symbol that a fair economic situation between countries as relative poor country has the chance to develop quicker. The poor country has strong demand in new technology knowledge. If government tries to intensify the degree of regulation, it may symbolize that government is destroying the chance of growth for developing country. Though the unemployment rate problem is not negligible problem, government can still find other financial strategies to fix it in disregard of regulation. Government can partake the benefit to its GDP and do moderate sacrifice is necessary, take a little, give a little, this is the rule.

 

Moreover, government's regulation is constrained by the difficulty of regulation of trade in service. (Phill,2009) clearly illustrates that the two imperative conditions to conduct regulation are: "The government can observe what actions firms are taking, and any proposed policy must be credible and enforceable. " These conditions are hard to accompany with regulation peacefully. Government's action might put banks in poor position and banks are even immune to the regulation. As mention before, government is less likely to know what the banks' employee actually doing and where they are doing the service, and obviously banks would not betray themselves to impart all the information to regulator. To explain the reason of government's action more deeply, even it wants to stop banks in doing off-shoring , what can they do? Telling them not to layoff employee? Would it threaten if they do not comply then tehy will be kicked out? Or charge fine from banks and tell them the reason is that they bring GDP to the government? Government has insufficient competence to oversee the operation in bits and bytes zipping via the internet, they also have no capacity to monitor how banks cater foreign customers.#p#分頁標題#e#

 

APRA (the Australian prudential regulation authority) is the main regulator and has the responsibility to do the prudential regulation to banks. But its main objective is to make sure bank hold adequate liquid asset, improve the soundness of financial assets and manage the possible risks. Off-shoring can assist to reduce capital illiquidity. In consideration of the obligation of regulation authority, government seems to impede the regulation and has to lead to different sort of disputation and debate.

 

Possible conclusion that external regulation in globalised economy may lead:

 

Due to the economic development and the effects of globalization, the codes of conduct in firms and corporate responsibility have been emphasized by (Rhys, 2001). Countries stand aloof with social democratic, they are free to trade with others and cooperate to bring economic benefits to their society. If an external regulator comes to interrupt the global businesses, this must bring a wave of market disarray to the whole world because companies' stability would be stopped by the sudden regulation to global businesses and then may influence the country's steady growth. Take the case of off-shoring, if the external regulation sets up a series of principles to restrict the activity, those developing countries which can benefit from it would lose the opportunity to catch up with developed country.

 

For instance, India may suffer unemployment rate, the Indian employee will lose their jobs, and this may result in the global shortage of workers. Because most of work are done by them. Despite of the possibility that whether developing would comply with the external regulation, the global productivity would be forced to go down, which shifts the goods or service price go up in other country, which means inflation might be speeded up. Hence people might question why external regulation exist, for the sake of global economic protection or more deeply consolidate firms' codes of conduct? But what about the responsibility of firms to their shareholders. The price to pay as external laws' appearance will outweigh the so-called stability of global economy.

 

Conclusion:

 

Consequently, there is no absolutely right or wrong decision when taking consideration to a ethical view. Off-shoring is a awesome example to illustrate this point. It can contribute quality and quantity of employment to countries which are industrialized and have agreed with trade liberalization. But it can also bring wage-differentiation and unfair treat to low-skilled employee when the demand for high-skilled labor is heightened. As (Jensen, Kirkegaard& Laugesen, 2006) mentioned, "the development of policies that ensure social inclusion and distributional justice thus become a central issue." Since the welfare and undesirable effect are both brought by this action, banks and government are in quandary whether to continue or refrain it.When trying to fulfill one party's requirement, they have dumped the responsibility for the other party. Furthermore, regulation is not easy to accomplish for the entity itself, the government , or the externality. The unilateral effort to comply with corporate social responsibility is out of capacity. However, it might be a promising way to enhance regulation if the consensus of most countries' view can be completed.#p#分頁標題#e#